Will Refinancing Cause My Property Taxes to Go Up?

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Mortgage and Lending with Guaranteed Rate, Marin County, CA NMLS: 22343
https://activerain.com/droplet/4QCk

"Will Refinancing Cause My Property Taxes to Go Up?"

 

Because the current interest rate environment remains conducive to refinancing, a concern that some have about taking action stems from confusion related to how their property taxes are determined, and specifically the question, "Will refinancing cause my property taxes to go up?"  It goes without saying that nobody wants to save money via refinance, only to see it evaporate in the form of higher real estate taxes.  But is this a real threat?  Or is it safe to assume that simply by refinancing you would not see a change in your tax basis?

 

Rob Spinosa Marin MortgageOur answer must first address, well, the address --- of the home, that is.  Since I'm a licensed loan officer in the state of California, working out of an office in Marin County, I'm only going to view this topic through our stylishly sunshaded eyes.  In California, properties are assessed to market value when they change ownership, and this does not happen in a refinance.  So if you purchased a home for $500,000 in 2008, and it appraises for $650,000 in 2014 when you obtain your refinance appraisal, the county assessor is still working off your original assessed value as far as your tax basis is concerned.  Behind the scenes is a more complex calculation that has to do with changes to the ad valorem portion of your tax bill, adjusted by the lesser of a 2% annual increase OR the rate of inflation, as dicatated by Proposition 13.  If you have questions about how to interpret your tax bill, give me a call or send me an e-mail any time and we'll review it together.  But again, the incremental adjustments to the original basis prevail here and not a jump to the appraised (or market) value at the time of refi.

 

"But wait!" you say.  "My tax bill really did go up when I last refinanced!"

 

Rob Spinosa Marin Home LoanOK --- let's look at this a little closer.  We know that a refinance alone would not trigger a reassessment, but are there some things that could cause a fluctuation in the amount of tax you’ve been paying?  In the downturn years, perhaps your home was eligible for a temporary reduction in its tax rate?  That may have recently reverted with rising values.  Or perhaps you have an escrow account?  Adjustments by your loan's servicer that are required to maintain a sufficient balance might show up as increases to your PITI payment.  Both of the above examples could have coincided with your refinance and they may have changed your tax payment amount, but they would not have been a result of the refinance itself.

 

I realize that property taxes are a significant component of your total monthly housing payment.  After all, I pay them too!  So if you're thinking about refinancing to get into better terms or a lower payment, and you have been reluctant to do so because you feel a mortgage lender's appraisal and process could trigger an increase in your property tax bill, you can step back from the ledge and take a deep breath.  Refinancing, in and of itself, does not cause your property taxes to increase in California.

 

 

Rob Spinosa
Mortgage Loan Originator
NMLS: 22343  CalBRE: 01297944
Cell:  415-367-5959     Fax:  415-366-1590
rspinosa@rpm-mtg.com     www.rpm-mtg.com/rspinosa 
1058 Redwood Highway, Frontage Road, Mill Valley, CA  94941

 

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RPM Mortgage, Inc - BRE# 01818035 – NMLS# 9472 - CA Bureau of Real Estate, Real Estate Corporation License. Equal Housing Lender.

 

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Tags:
property tax
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assessment
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Rainmaker
1,166,284
Jane Peters
Home Jane Realty - Los Angeles, CA
Los Angeles real estate concierge services

This is an excellent explanation for those considering refinancing, and something that can put their minds at ease.

Jul 08, 2014 07:19 AM #1
Rainmaker
613,229
Mike Young
203kOnLine.com, covering the USA - Las Vegas, NV
FHA 203k Consultant 916-758-1809

It is also a question that comes up quite often now and again. I'm going to mark this post and share it whenever the question comes up again. Thank you for sharing.

Jul 14, 2014 01:16 PM #2
Anonymous
Mona Medina

Is it considered a change of ownership if I add a co-borrower at the time of refinance?

Jan 27, 2015 08:11 AM #3
Rainmaker
542,870
Rob Spinosa
Guaranteed Rate, Marin County, CA - San Anselmo, CA
Vice President of Mortgage Lending, Marin County

Hi Mona --- it is not a change of ownership in that situation.

Jan 29, 2015 08:34 PM #4
Anonymous
Mary

Tagging off of what Mona asked. Is it considered a change of ownership if I add a co-borrower at the time of refinance? Then later on remove the original borrower and keep myself as the sole borrower? My cousin would initially carry the mortgage for me, then in a few years we would refinance, add myself to the loan only to later take her off because it is my home. Let me know your thoughts. Thank you.

Jun 16, 2015 02:27 AM #8
Rainmaker
542,870
Rob Spinosa
Guaranteed Rate, Marin County, CA - San Anselmo, CA
Vice President of Mortgage Lending, Marin County

Mary,

You state that "my cousin would initially carry the mortgage for me," so I'm going to assume that both you and your cousin will be on the title of the home.  If this is incorrect, we have a different issue.  But so long as you're both on the title of the home initially and when you refinance later on, there would be no implications for reassessment or transfer tax.  Both of you would be on the title before and after refinance.  It would just be the financing that's changing.

Jun 16, 2015 10:16 PM #9
Anonymous
Lori

I realize this is an older post, but I was searching for an answer to my questions and found your blog that is relevant to my question. My senior citizen mother living in CA is refinancing her mtg but qualifying with my daughter, her granddaughter. I read above that this transaction will not trigger a reassessment for property taxes. My subsequent question would be, does it matter how her granddaughter will be vested in the title, i.e., “Joint Tenants” or “Tenants in Common" with a certain owner percentage for each: (50/50%, 60/40%, etc).

Nov 03, 2017 08:48 AM #10
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Rainmaker
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Rob Spinosa

Vice President of Mortgage Lending, Marin County
Can I Get a Jumbo Loan with 10% Down?
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